On Bank Loan Of Small And Medium Enterprises

In 1990s, people began to attach an important role of small-and-medium enterprises (SMEs) in our economic reform and development, and realized that their advantage of developing our low labor cost products, increasing employment as well as encouraging technical innovation and etc, can not be substituted by large enterprises. Yet it is generally admitted that the difficulty of obtaining external financing is one of the important factor limiting their further development of potentials and speed. Generally speaking, bank loan is the important, perhaps the most important resources of SMEs financing, and in China, it is even the single important external financing. Therefore, make a study on bank loan to SMEs is significant both in theory and in practice. The first chapter discusses the financing gaps of SMEs. At first, I examine the important position of SMEs in a modern economy and the method of defining SMEs. Then I discussed the existence of SMEs'financing gaps, and their negative effects on the development of SMEs. The second chapter deals with bank financing of SMEs within a framework of SMEs'financing structure theory. Firstly, I analyze the characters and causes of SMEs'financing structure, emphasizing the effects of information and agency problems in deciding the differences between SMEs and large enterprises in financing structure. Then I talk about the position of bank financing in SMEs'financing structure, and its influence on the other financing forms of SMEs. At last I conclude that bank financing is an important form in SMEs'financing, it can influence other forms of financing effectively through transferring the signals of a SME's quality and risk. The third chapter stresses on the state credit guarantee system for SMEs. At first, I discuss the benefits and costs of the state credit guarantee system for SMEs as an institutional system, and the benefits of which are the positive effects of encouraging the development of SMEs, and the costs are the possible efficiency loses in its proceeding. Then I examine the foreign experiences of the public policy credit guarantee systems of SMEs, including its basic statuses and types in some countries. Finally, I make suggestions on how to improve China's credit guarantee system of SMEs The fourth chapter focuses on the relations between the structure of bank size and SMEs'bank financing. At first, I comment on the representative viewpoints in this area, and account for the viewpoint that large bank have no advantage in financing SMEs is unilateral. Then I present the view that banks of different sizes all have relative advantages in financing SMEs, and following the progress of information technologies, even the large banks could strengthen their positions and advantages in financing SMEs. At last, I comment on the idea of dealing with the problems of SMEs'bank financing through developing small banks and small non-bank financial institutions. My opinion is that the defect of structure of bank size is a sign of financial repression in China, and not the decisive cause of the difficulty of SMEs'bank financing, only developing small bank may not be able to tackle the problems of SMEs'bank financing properly. The fifth chapter dwells on the main factors that influence SMEs'bank financing. To begin with, I analyze the negative effects on SMEs'bank financing of interest rate constraint, bank monopoly, and information asymmetry in the frame of debt contract theories. Then, I conclude that financial repression is the institutional cause that incurs the difficulty of SMEs'bank financing. The sixth chapter focuses on the problems and deals with the solution of SMEs'bank financing in China. This chapter is rather a summary of the study on SMEs'bank financing on the one hand, and a systhesis of various angles of this thesis on the other hand. At first, I examine the basic states of SMEs in China, and find out that SMEs have difficulties in obtaining bank financing. Then, I analyze the two causes of SMEs'bank financing problem, namely, credit system of SMEs is incomplete, and China financial system reform lags to the whole economic system reform. Lastly, I make some policy suggestions that we should consummate SMEs'credit system, reform the loan management system , change the property right structure of small banks, innovate and upgrade the technologies of credit system, to solute SMEs'bank financing problems basically.